Establishment of a Foreign Invested for software production in Vietnam

This is reference to your email from which, we understand that foreign company (hereinafter referred to as “Client”) is now seeking legal advices for establishment of a Foreign Invested Company (hereinafter referred to as “FIC”) for software production in Vietnam. We thereforeare grateful to present you our Legal Services Proposal for your review and consideration.

1. BRIEF INTRODUCTION ON ESTABLISHMENT OF FIC

1.1.      General Introduction

The establishment of a FIC in Vietnam requires an Investment Certificate from the licensing authority. Depending upon the location of the company, the licensing authority may be the Provincial People’s Committee (for companies located outside industrial or export processing zones) or the provincial Industrial and Export Processing Zones Management Authority (for companies located in industrial or export processing zones).

We would like to clarify that the procedure for establishment of a FIC in Vietnam generally takes a rather long time in comparison with other countries in the region. Our practical experiences show that although the total time for establishment of a foreign invested company as stipulated under Vietnam Investment Law 2014 is only 15 days, the actual process may take a longer time due to that the competent authority must consult other relevant offices to evaluate the investment project. With respect to several cases that involves with relocation of 10,000 people or more in highlands; 20,000 people or more in other areas or requirement for changes of land purposes or project in several special field such as Construction and operation of airports; air transport; Construction and operation of national seaports; Petroleum exploration, extraction, and refinery etc, it shall require for approval from the National Assembly, Prime Minister or Provincial People Committee before starting the licensing process. In this case, we assume that your case is not subject to such requirement for approval. However, we reserve our right to re-quote our professional fee and amend the work schedule if your case is subject to approval of the National Assembly, Prime Minister or the Provincial People Committee. In order to setup a FIC, it shall require you to undergo two following steps:

Step 1: Obtainment of Investment Certificate. The Law requires that within 15 working days from submission of the application dossier the competent authority shall have to issue the Investment Certificate for Foreign Investor. However, having preliminarily discussed with the Licensing Authority, we do not much expect that the licensing authority can comply with this requirement in practice, especially, those relating to conditional investment sectors. For granting the Investment Certificate, the relevant licensing authorities shall evaluate the legitimacy and the feasibility of such Investment Project to determine on granting of the Investment Certificate on the following basis:

• Legal framework including Vietnam’s WTO Commitments, Vietnam Investment Law, Vietnam Enterprise Law, Regulations applicable to specific industries as well as the master economic development plan of the city or province that the FIC shall register its head-office.
• Your financial ability, investment capital to put in the Investment Project, facilities and human resources serving the implementation of such investment project in Vietnam.

1. Step 2: After obtainment of Investment Certificate, Client shall be required to obtain the Certificate of Business Registration. The Law requires that within 05 working days from submission of application dossier, the competent authority shall have to issue the Certificate of Business Registration for forming the Foreign Invested Company.

1.2. Setting up FIC for software production

Software production is classified to CPC of 841-845 under Vietnam-WRO Commitment. Accordingly, Client is entitled to setup a wholly foreign invested company in Vietnam for producing software.

According to our practical experience in similar previous case, for securing possibility of obtaining Investment Certificate for FIC, we highly recommend Client to carefully consider following matters:

–         Capital:Vietnam Law does not stipulate minimum capital amount for this industry. However, according to our practical experience in previous case, an amount of 90,000USD upward should be reasonable;

–         Parent Company must have positive business operation result in at least 02 recent years. This must be evidenced by audited Financial Statements for 01 recent year and bank account statement.

–         Head Office Address of the FIC must be compliant with master plan of the City.

The roadmap for the incorporation of the FIC can be described in following steps as follows:

1. Preparing the application dossier: We shall collect necessary information and documents from you. Upon receipt of necessary information and documents from you, we shall translate documents from English into Vietnamese and prepare the application dossier under the standard forms. The initial drafted application dossier shall be sent to you for your comments. Then, after updating the application dossier based on your comments, we shall obtain the preliminary comments from the competent authority and send the finalized application dossiers for you to sign and seal. We anticipate that this phase shall be completed within 5 working days.

2. Licensing Procedure:

–         02 working days from receipt of documents duly signed and sealed from Client, we shall submit the application dossier for starting the licensing procedure.  It shall take about 20 working days from submission of application dossier to the competent authority for the provincial licensing authority to grant the Investment Certificate.

–         03 working days from receipt of Investment Certificate issued by the competent authority, we shall submit the application dossier for obtainment of Certificate of Business Registration. We shall obtain the Certificate of Business Registration within 05 working days from the submission date.

3. Post licensing: Within 15 working days we shall complete the post licensing procedures such as publishing the FIC in News Paper, obtaining seal.

For avoidance of any doubt, in practice, the administrative procedure can be longer due to that the competent authority must consult relevant ministries before granting License. In such case, SB Law shall try its best to accelerate the progress in order to obtain the approval at the soonest.

2.         Our scope of work

In light above, following works are proposed based on the request of Client. However, depending on the specific position/situation of Client, several work items may not be necessary. Meanwhile, other works may be required. However, any additional works shall not fall under the scope of this Legal Service Proposal, but could be provided upon request.

3.         PROFESSIONAL FEE

3.1. The Price for performing the SB Law services as mentioned in item 3 above will be as follows:

–         Professional fee for preparing application dossier including Application for Investment Certificate, Corporate charter, Board resolution, Explanation letter for satisfaction of investment condition, Application for business license and Power of attorney and conducting name search shall be 1,300USD (One thousand and three hundred US Dollar);

–         Professional fee for Obtaining the Investment Certificate shall be 2,500USD (Two thousand and five hundred US Dollar);

–         Professional fee for obtaining the Certificate of Business Registration shall be 250USD (Two hundred and fifty US Dollar);

–         Professional fee for post-licensing procedures including announcement of establishment of FIC, Obtaining Seal Sample and Certificate of Seal Sample Registration: 100 USD (One hundred US Dollar);

–         Registration of Token for 01 year: 200USD (Two hundred US Dollar).

The fee is exclusive of 10% VAT and cost for translating Client’s documents from Japanese into Vietnamese (18 USD/150 words).

3.2. Services fee shall be paid to SB Law as follows:

–               Within 03 working days from the date of signing the legal service contract, Client will pay for SB Law the first payment which equivalent to 50% of the total estimated services fee;

–               Client willpay the remained fee and other cost and disbursement incurred on Client’s behalf within 05 working days from obtainment of the Certificate of Business Registration.   

–                Client shall immediately notify SB Law of when actual payment(s) will be made on the amount specified in the invoice(s). SB Law will start working only upon receipt of payment of the respective invoice(s). Alternatively, SB Law reserves the right to withdraw the service if payment is not received 10 days after the date of the invoice. Further, in the event payments are not received by the payable date, SB Law reserves the right to suspend services and/or levy and collect a late payment fee of 0.5% per month up to the date of receipt of payment by SB Law.